The credit union boom

Fed up with being fleeced, North Americans are flocking to co-operative savings societies.

Back in 1897, Alfred Desjardins
was distressed when he heard about
a Montreal man forced to pay
$5,000 interest on a loan of $150.
Ordinary folk wanting small loans
were spurned by big banks and so
turned to loan sharks. Desjardins,
a former journalist with a keen
interest in finances, decided to do
something about it. Why not start a
‘co-operative savings’ society where
citizens could extend loans to each
other, using their collective savings
for mutual benefit?

Desjardin’s vision took off. More
than a century later, the Caisses
Desjardins du Québec is the largest
credit union in North America and
the sixth largest financial institution
in Canada, with more than 5.8
million members, $172 billion in
assets, 42,600 employees and nearly
$80 million ploughed back into
community sponsorships, donations
and bursaries.

According to the US Credit Union
National Association, 54 per cent of
credit unions increased membership
in 2011.

No doubt about it – credit unions
are booming in North America since
the bank-fuelled financial crisis. In
most cases, membership is based on
belonging to a certain profession,
sharing a common workplace, or being
part of the same cultural or ethnic group.

A lot of the attraction is sparked by
growing disgust with the big banks’
huge profits, cavalier service, bloated
executive salaries and sky-high fees.

According to the US Credit Union
National Association, 54 per cent of
credit unions increased membership
in 2011. After the Bank of America
announced it would introduce a fivedollar
debit-card purchase fee, credit
union membership jumped by more
than 650,000 (the Bank has since
cancelled the fee).

In the US, credit unions help save
money because they are non-profit.
They often pay better interest rates
on savings, and charge lower loan and
credit-card rates.

Self-help, co-operative principles
and a savings and loan system owned
and administered by its members?
Sounds like just the ticket. Bankers,
take note.

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